Delivery Group – 2 1 Nov 1 9 Ofgem
Delivery Group m eeting agenda Objective of todays’ session : • General update on the project since the last time we met and next steps Overview of the 2 nd working paper • I tem Tim ing Introduction and overview 10: 00 - 10: 10 Project update 10: 10 - 11: 30 • 2 nd working paper • Work next year • Impact assessment • Access, charge design and cost model workstreams • Network data and monitoring RFI Transmission network charging - update 11: 30 – 11: 45 Connection boundary – overview of 2 nd working paper 11: 45 - 13: 00 Lunch 13: 00 - 13: 45 Small users – overview of 2 nd working paper 13: 45 - 15: 00 Non-SCR update 15: 00 – 15: 10 Next steps 15: 10 - 15: 15 2
Project update 3
Future Charging and Access The energy system transformation will create challenges and opportunities for our electricity networks. We are considering how electricity network access and charging should be reformed to address these changes and existing issues: Access and forw ard looking charging reform ( Access SCR) . We want to get better value out of electricity networks by using them more efficiently and flexibly. If we do this, the system will be able to accommodate more electric Mostly vehicles and other new technology at lowest cost. Ofgem - The Targeted Charging Review ( TCR) . This seeks to remove some of led remaining embedded benefits, and to allocate residual charges in a fairer way. These should not send signals and are there for recovery of the allowed revenue for the network companies. The Balancing Services Charges Task Force. The Electricity System Operator NG ESO- has led a review of balancing services charges in parallel with the Access reform led and the TCR. It concluded that these charges should be treated as cost recovery.
Background to the SCR Objective of Access Significant Code Review ( SCR) : We want to ensure electricity networks are used efficiently and flexibly, reflecting users’ needs and allowing consumers to benefit from new technologies and services while avoiding unnecessary costs on energy bills in general. We launched the Access SCR in December 2018. The scope is • Review of the definition and choice of transmission and distribution access rights • Wide-ranging review of Distribution Use of System (DUoS) network charges • Review of distribution connection charging boundary • Focussed review of Transmission Network Use of System (TNUoS) charges. The key milestones are: • Publish 2nd working paper – before the end of this year. • Publish minded to consultation – summer 2020 • Publish final decision – early 2021 • Implement options – April 2023 5
Scope of 2 nd w orking paper 1 st w orking paper: We published our first working paper at the start of Sept. The paper covers: • An initial overview and assessment of options for access rights, better locational distribution network charging signals and charge design. • The links between access, charging and procurement of flexibility. 2 nd w orking paper: We intend to publish a second working paper at the end of year. The paper will cover: • Small user consumer protections • Distribution connection charging boundary • Focused transmission charging reforms 6
Changes to w orkstream leads As a result of resourcing changes, w e are am ending the Ofgem leads for several w orkstream s. Jon Parker/ Andrew Self Access right DUoS Distribution Small user DUoS charge Analytical Links with flex TNUoS definition and locational connection treatment design framework procurement choice signals boundary David Andy Malley Lynda Carroll Harriet Harmon Amy Freund Stephen Perry Beth Hanna Patrick Cassels McCrone/ Tim Aldridge Silvia Ankita Mehra Orlando/ Lina Phil Brodie Kieran Brown Phil Brodie Apostolli 7
Tim escales for next year Our work on the Access SCR will continue into next year. This will include continuing our option assessment and the development of the IA. Options Publish tw o Consultation assessm ent w orking papers on draft and m odelling developing direction for draft I A options Decision on Launched Q3 and Q4 GEMA steer on Final decision consultation on SCR 2 0 1 9 options short-listing on direction draft SCR decision Dec 2 0 1 8 Feb 2 0 2 0 Early 2 0 2 1 June 2 0 2 0 We are expecting the DG and CG to continue next year. We are also expecting the existing sub- groups to continue. These will be useful inputs in shaping our options assessment and modelling for draft IA. 8
I m pact Assessm ent Area of w ork How have w e taken this w ork forw ard and our current thinking Distribution Transm ission • CEPA and TNEI have commenced their support to the cost model subgroup, reviewing and updating the network model and reviewing LRMC approaches Netw ork Modelling • The group has refined the approaches to be incorporated, including testing spare capacity • NG ESO to provide • The sub-group is testing the model, with finalisation in mid-December modelling based on their existing Transport model • CEPA and TNEI submitted final specifications in late October and a • Discussions initiated proposal for the next phase of input to Ofgem and DCUSA • The DCUSA Panel has signed off Phase 2a of the modelling, which Tariff Modelling kicked off on 15 th Nov • Ongoing focus will be on managing the linkages between this and network modelling • Six proposals were received to support impact assessment modelling • Following shortlisting and presentations, we have appointed CEPA and TNEI, subject to contract following I m pact Assessm ent the 10-day OJEU standstill period • We have commenced a literature review to support qualitative options assessment • We met with network planners at each of the DNOs, to better understand how the options we are Netw ork Benefits considering would impact how the system is designed. We intend to circulate our key conclusions. 9
I m pact assessm ent • As we noted on a previous slide, we have appointed CEPA and TNEI to undertake our required impact assessment modelling. This contract is scheduled to be formally awarded following standstill on 26 th November. The key next steps will be: • A contract kick-off meeting between Ofgem and the CEPA and TNEI team followed by further development of the methodology and underlying project plans • Commencement of work in early December on: • Definition of scenarios, user archetypes, sensitivities and materiality • Review of available literature and evidence to underpin behavioural response assumptions • Definition of links with reference network models and tariff modelling • Opportunity for CEPA and TNEI to attend and present at next DG and CG (we note that specifics are to be confirmed) 10
Access subgroup update Area of w ork Update 1 . Monitoring and enforcem ent note: capture current approach to monitoring and enforcing access rights and potential future Report finalised and due to be published on the CFF website. changes required to accommodate new access choices. 2 . Sm all users: • develop and assess the options to improve the clarity and Access sub-group been assessing options to improve clarity and choice of choice of access options for small users access options for small users, as well as potential adaptations to protect • Which access choices should be available for small users and consumers. which should they be protected from? Hosted network planner meeting to understand impact of proposals on the 3 . Assessing the im pact: To what extent do options support the development of an efficient network. Intend to circulate survey to better efficient use and development of network capacity? understand impact of flexible connections on efficient use and development of network capacity. Intend to circulate survey to DNO connection teams to better understand 4 . Meeting users needs: To what extent do options reflect the users’ interest in “flexible connections”. Ofgem reviewing data collected on user’s needs? user interest in access right options and meeting LUG members. CEPA and TNEI submitted final specifications in late October and a proposal 5 . How could these access choices be reflected in charging? for the next phase of input to Ofgem and DCUSA 6 . Distribution-connected users’ access to the transm ission netw ork: Identify and assess options for how distribution- Draft report identifying current distribution-connected users access to the connected users access to the transmission network could be transmission network and assessing potential high-level options for change. defined 7 . The respective roles of sharing and trading access Draft report identifying the roles of sharing and trading access.
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